TaxTMI 
TaxTMI 
2015 (11) TMI 55
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.... per agreements, but had not paid service tax on the taxable value received for advertising services. A show cause notice bearing F. No. V/STS/GR. IX/DN-II/1479/2004 dated 26/10/2004was issued to the appellant on the ground that they had failed to pay service tax of Rs. 27,46,030/- on the taxable value of Rs. 5,26,70,587/- received by them during 1/4/2000 to 30/6/2003 for advertising services. The said show cause notice had been adjudicated vide Order-in-Original dated 30/12/2008 wherein it was held that the tripartite agreements between the appellant, M/s Hero Honda Motors Ltd. and the cricket players was for endorsing the products and brand of M/s. Hero Honda Motors Ltd. by the cricket players as models and advertised by the appellant through various mediums e.g. television, radio, displaying the product on the cricket bats etc. throughout the contract territory during the contract period only. It was also held that the appellant even if they claim they are not known as an Advertising Agency, had provided services connected with display of advertisements during 1/4/2000 to 30/6/2003 as per definition under Section 65(3) of the Act, and not business auxiliary services which became....
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.... Pharmaceutical Ltd. Vs. Commissioner [2006(3) STR 711(Tri.)] With regard to limitation he submits that show cause notice for the period 1/4/2000 to 30/6/2003 has been issued on 26/10/2004 i.e. after more than one year, therefore show cause notice is time bar. He submits that appellant was already registered under the head of Event Management Servcie way back in 2002 and the BAS was included in the registration and they started paying service tax from 1/7/2003 therefore appellant was very much registered and the activity was known to the department. Therefore there is no suppression of facts on the part of the appellant; hence extended period could not have been invoked. In this support he placed reliance on following judgments: (a )Essel Packaging Ltd. Vs. CCE[2000(117) ELT 466(Tri)] (b) Polymers & Transmission Products Vs. CCE [2000(117) ELT 119(Tri.)] He further submits that the issue in the present case involves interpretation of law, therefore the penalties imposed under Section 76 and 78 are not correct. In support of this submission he placed reliance on following judgments: (a)Century Cement Vs. CCE [2002(150) ELT 1065(Tri)] (b)Bi....
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....ent in any manner. In the instant case to conclude whether the service of advertising services or otherwise, it is necessary to go through the relevant clauses of the tripartite agreements between appellant, M/s. Hero Honda Motors Ltd. and Cricket players. Relevant paras of said agreements are extracted below: Agreement of Shri Sourav Ganguly This agreement made this day of 21st June, 2002 at New Delhi between M/s. Hero Honda Motors Limited, a company incorporated under the Companies Act, 1956 and having its registered office at 34 Basant Lok, Vasant Vihar, New Delhi (hereinafter as Hero Honda, which expression shall, unless repugnant to the context or meaning thereof, be deemed to include its successors and assigns) of the first part. And M/s. PERCEPT D'MARK (INDIA) PRIVATE LIMITED, a company incorporated under the Companies Act 1956 and having its registered office at Percept House, 22, Raghuvanshi Estate, 11/12, Senapati Bhapat Marg, Mumbai 400013(hereinafter referred as Percept, which expression shall, unless repugnant to the context or meaning thereof, be deemed to include its successors and assigns) of the Second part. ....
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....Raghuvanshi Estate, 11/12, Senapati Bhapat Marg, Mumbai 400013 (hereinafter referred as Percept DMark, which expression shall, unless repugnant to the context or meaning thereof, be deemed to include its successors and assigns) of the First Part. Mr. Virender Sehwag, residing at RZ-145, Laxmi Garden Nazafgarh, New Delhi-43 (hereinafter referred to as the Model) of the Second Part. M/s. Hero Honda Motors Ltd., a company incorporated under the Companies Act, 1956 and having its registered office at 34 Basant Lok, Vasant Vihar, New Delhi, 110057 ( hereinafter as reffered to as Client, which expression shall, unless repugnant to the context or meaning thereof, be deemed to include its successors and assigns) of the THIRD PART. And Collage Sports Management, partnership firm and having its office at 56, Community Centre, East of Kailash, New Delhi-1100065 (hereinafter referred as Collage Sports Management which expression shall include its successors and assigns) of the FOURTH PART. WHEREAS Percept D'Mark has been appointed by the Client as the agency in connection with the promotion of the products which includes motorcycles, scooter and mopeds; ....
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....e purpose of conceptualizing, creating and producing advertising campaigns covering Television, Prizes, Outdoor and Point of Purchase Material in relation to the Products, Public appearances, Celebrity dinners, Trade promotions, Consumer promotions, Plant Visits, staff motivation seminars in relation to the Products and to perform his obligations under this Agreement as set out in schedule hereto (the 'Services').'Services to be provided by the Model will take place on mutually convenient dates and in mutually convenient locations to be agreed in the light of the Models professional and other commitments, provided the Model shall co-operate with the Client to in the co-ordination of his schedule with the Clients need for his Services, and subject to the Client provided for all travel, meal and accommodation expenses, including business class airfare and five star accommodation/suitable accommodation wherein facility is not available for the Model. It is clarified for the avoidance of doubt, that days of availability of the Model shall be exclusive of travel time and one full shooting day shall mean a maximum ten (10) hours at the destination city where the shooting shall take plac....
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....d to Percept D'Mark/ The Clientsbreach of clause 3 above) or (iii) advertising or promotional material provided by or on behalf of Percept D'Mark/ The Client in relation to the advertisement or promotion of the Products. Agreement of Shri Yuvraj Singh This agreement made this day of 1st Sep, 2002 at New Delhi between M/s. Hero Honda Motors Limited, a company incorporated under the Companies Act, 1956 and having its registered office at 34 Basant Lok, Vasant Vihar, New Delhi-110057 (hereinafter as {Hero Honda, which expression shall, unless repugnant to the context or meaning thereof, be deemed to include its successors and assigns) of the first part. And M/s. Percept D'mark (India) Private Limited, a company incorporated under the Companies Act 1956 and having its registered office at Percept House, 22, Raghuvanshi Estate, 11/12, Senapati Bhapat Marg, Mumbai 400013 (hereinafter referred as Percept, which expression shall, unless repugnant to the context or meaning thereof, be deemed to include its successors and assigns) of the Second part. And Mr. Yuvraj Singh, an individual residing at 5904, Duplex Houses, Modern Ho....
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....RK (INDIA) PRIVATE LIMITED, a company incorporated under the Companies Act 1956 and having its registered office at Percept House, 22, Raghuvanshi Estate, 11/12, Senapati Bhapat Marg, Mumbai 400013 (hereinafter referred as PDM, which expression include its successors and assigns) of the First Part. And Mr. Yuvraj Singh, an individual residing at 5904, Duplex Houses, Modern Housing Complex, Mani Majra, Chandigarh- 160101 (hereinafter referred to as The Model) of the Second Part. And M/s. Hero Honda Motors Ltd, a company incorporated under the Companies Act, 1956 and having its registered office at 34 Basant Lok, Vasant Vihar, New Delhi, 110057 ( hereinafter as referred to as 'Client') of the THIRD PART. WHEREAS 'PDM' has been appointed by 'the Client' as one of the agencies, the agency in connection with the promotion or sales and publicity of their products namely Hero Honda motorcycles. AND WHEREAS 'the model' has agreed to act as a model in connection with the promotion of the Products of 'The Client' as defined herein on terms and conditions hereinafter appearing. NOW IT IS HEREBY AGREED as follows: In thi....
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.... as stipulated in clause 3& 4 of this Agreement. Time is of the essence in relation to all payments under this Agreement. 7. SERVICES OF THE MODEL (a) The Model agrees to be available for Six(6) days during the Contract Period for the purpose of conceptualizing, creating and producing advertising campaigns covering Television, Outdoor and Point of Purchase Material in relation to the Products, Public appearances, Celebrity dinners, Trade promotions, Consumer promotions, Plant Visits, staff motivation seminars in relation to the Products. (b) These Services to be provided by the Model will take place on mutually convenient dates and in mutually convenient locations to be agreed in the light of the Models professional and other commitments and subject to the Client provided for all travel, meal and accommodation expenses, including business class airfare and five star accommodation/suitable accommodation wherein facility is not available for "The Model" 8. CREATIVE APPROVAL "The Model" has the right of reasonable approval of all commercials and films in storyboard form and the copy of all print advertisements, provided however, that such a....
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....ppointed by the Client as one of the agencies the agency in connection with the promotion or sales and publicity of their products namely Hero Honda motorcycles. AND WHEREAS the model through the agent has agreed to act as a model in connection with the promotion of the Endorsed Products (as defined herein below) on terms and conditions hereinafter appearing. NOW IT IS HEREBY AGREED as follows: 1. DEFINITIONS: In this Agreement the following words shall have the following meanings: (a) "The Model Identifications" shall mean any words and/or symbols and/or photographic and/or graphic representations, which identify the "the Model" and/or his name and likeness, in connection with the Endorsed Product, and shall include, without limitation, audio recordings, visual recordings, image, caricature, sobriquet, autograph, lieness, portrait, voice, silhouette of the Model. (b) "Product" shall mean any model of two wheelers manufactured by The Client. (c) "Endorsed Products" shall mean the Product of "The Client", which is advertised or promoted in connection with the Model Identification. (d) "Contract Territory" shal....
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.... as the case may be the manner and at the times set form herein, and as stipulated in Clauses 3 and 4 of this Agreement. PDM shall, within fifteen days from receipt of payment from the client as provided in Clauses 3 and 4 hereinabove, make payment of the said amounts to the Agent on behalf of the Model by way of Demand Draft drawn in favour of Sporting Frontier[ ] Limited or in any other name as may be advised by the Agent/Model from the time to time, and drawn on such Indian bank account as may be designated by the Agent/Model or any other party in whose favour the DD will be made. Time is of the essence in relation to all payments under this Agreement. 6. SERVICES OF THE MODEL (a) "The Model" agrees to be available for Eight (8) days during the Contract Period for the purpose of conceptualizing, creating and producing advertising campaigns covering Television, Outdoor and Point of Purchase Material in relation to the Products, Public appearances, Celebrity dinners, Trade promotions, Consumer promotions, Plant Visits, staff motivation seminars in relation to the Products. (b) These Services to be provided by the Model will take place on mutually conveni....
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....asant Lok, Vasant Vihar, New Delhi, 110057 (hereinafter as referred to as "Client") of the THIRD PART. AND WHEREAS "The Model" has agreed to act as a model in connection with the promotion of the Products of "The Client" as defined herein on terms and conditions hereinafter appearing. NOW IT IS HEREBY AGREED as follows: In this Agreement, the following words shall have the following meanings: (a) "The Model Identifications" shall mean any words and/or symbols and/or photographic and/or graphic representations, which identify the "the Model" and/or his name and likeness, in connection with the Product. (b) "Product" shall mean any model of two wheelers manufactured by "The Client". (c) "Endorsed Products" shall mean the Product of "The Client", which is advertised or promoted in connection with the Model Identification. (d) "Contract Territory" shall mean India. (e) "Contract Period" shall mean a period of (12) months commencing from 23rd September, 2002 and concluding on 22nd September, 2003 or on such earlier date as this Agreement may be terminated in accordance with the terms here of. (f) "Contract ....
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....se Services to be provided by "the Model" will take place on mutually convenient dates and in mutually convenient locations to be agreed in the light of "the Models" professional and other commitments and subject to the Client provided for all travel, meal and accommodation expenses, including business class airfare and five star accommodation/suitable accommodation wherein facility is not available for "The Model". (c) "The Model" shall endeavor to make best efforts and co-operate in every way The Client and in the public appearance use of his judgment in choice of language and demeanor to create and atmosphere, which would be conclusive to appearance effort. (d) That "The Model" will make sure that the bat logo is neat and clean in appearance on the from and back of the bat and that the requirement will be informed to "The Client/PDM for fresh /replenishment of the stickers well in advance. 8. CREATIVE APPROVAL "The Model" has the right of reasonable approval of all commercials and films in storyboard form and the copy of all print advertisements, provided however, that such approval, shall be limited to depictions of "The Model" and to words s....
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....sing services and accordingly rightly upheld the order-in original. The findings of the Ld. Commissioner (Appeals) are reproduced below: 07. I have gone through all the records of the case including the written and oral submissions made by the Appellant at the time of personal hearing. 08. The issue involved in this Appeal is, whether the Appellant had rendered taxable advertising services, during 01.04.2000 to 30.06.2003. 09. In the instant case the Appellant, had a tripartite agreement with M/s Hero Honda Motors Ltd. and the cricket players for the endorsement of the products of M/s Hero Honda Motors Ltd. by cricket players, as Models, in advertisements through various mediums eg television, radio etc. throughout the contract territory during the contract period only. The Appellant's contention is that the services rendered by them were only in the nature of liaison work and not advertising services since they are not involved in making, preparation, display or exhibition of advertisements, as defined under Sec 65(3) of the Act. 10. From the copies of tripartite agreements signed with various cricketers, and submitted by the Appellant, it is seen that as per these....
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....al of all materials provided, relating to depiction of Hero Honda and any producjmodels/programme under the Hero Honda umbrella. All the payments made under the agreement were to be made to the Appellant in Indian rupees and were subject to service tax The Appilllant/Hero Honda were also to indemnify the Models for any damages rising out of any act of the Appellant/Hero Honda in relation to the advertisement, promotion or sale of the endorsed products. Further, upon expiry of these agreements, M/s Hero Honda would cease to use the Model identification promotional material to advertise their endorsed products. (ii) As per each of these tripartite agreements, all the individual cricket players had their own agents for approval of advertising materials and receiving payments. Only in the case of Sourav Ganguly, the Appellant were also his agents, the rest of the agreements being the same. 13. From these above referred details of the said tripartite agreements, the services rendered by them were in no way connected with any liaison work relating to the endorsement rights of the cricket players/Models, as claimed by the Appellant. Contrary to their submissions, the Appellant in ha....
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....ents should be flashed. Thus; locating or selecting a particular media would be a "Service", by the advertising agency "in relation to the advertisements". This applies to the Appellant's case since, as per the said tripartite agreements, they had been appointed by M/s Hero Honda in connection with the promotion or sales and publicity of their products and were involved in conceptualizing, creating, and producing advertising campaigns, with the Models, in relation to the endorsed products. 15. (i) As per the tripartite agreements, all the payments made under the agreement were to be made to the Appellant, by M/s Hero Honda, in Indian rupees and were subject to service tax or subject to deduction of all taxes required under the law and that service tax shall be paid by Hero Honda. Therefore, the submissions of the Appellant that, in their case there was no consideration and the question of payment of service tax did not arise, is neither based on facts nor as per the requirements of service tax law. (ii) During the relevant period, as per Sec 67 of the Act, read with Rule 6(1) of the Service Tax Rules, 1994, the value of any taxable service shall be the gross amount charge....
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....ervices, rendered by them. 'Event Management services' and 'Advertising services' are two distinct services and a person providing both these services has to pay service tax separately on both the services rendered by him, as per service tax law. The instant case is based on facts and not on interpretation of law. Contrary to facts, based on the tripartite agreements, the Appellant by stating that, in their case there was no consideration and the question of payment of service tax did not arise, have admitted that they had suppressed facts relating to the taxable advertising services. rendered by them. 17. As regards penalty imposed on them under. Sec 76 and sec 78 of the Act, in the M/s Krishna Poduval case, [(2006) 1 STR 185] the Hon'ble Kerala High Court has held that under Sections 76 and 78 of Finance Act, 1994, incidents of imposition of penalty are distinct and separate under the two provisions and even if offences are committed in course of same transaction or arise out of same act, penalty imposable for ingredients of both offences and that person who is guilty of suppression deserve no sympathy. This decision of the Hon'ble Kerala High Court square....